Chapter 13 bankruptcy is a full or partial repayment plan administered by the bankruptcy court. The debtor submits a plan for approval, and when the plan is approved, he or she makes monthly payments to the bankruptcy trustee. The trustee then makes payments to creditors in accordance with the terms of the plan. At the end of the repayment period, which may be from three to five years, any remaining unsecured, dischargeable debt may be discharged (wiped out) if all payments have been made according to the plan.
In one sense, it is easier to qualify for Chapter 13 bankruptcy than for Chapter 7. There is no “means test” for Chapter 13 bankruptcy and some debtors who cannot qualify for Chapter 7 bankruptcy decide to file under Chapter 13 instead. However, Chapter 13 bankruptcy requires a regular income that will allow you to create a budget and make predictable and reliable payments to the bankruptcy trustee.
The fact that you have declared bankruptcy will remain on your credit report for seven years. While this will not necessarily prevent you from being able to obtain new credit, potential creditors will take it into consideration. Additionally, while you are in Chapter 13, you must obtain approval from the court before you incur new debt.
When you come to meet with one of the attorneys at Long & Long PC, bring the following documents if available:
- Paycheck stubs for you and your spouse (if married), including current month and last two months
- Documents showing miscellaneous income received over the last seven months, including commissions or bonuses, child support or spousal support (alimony), gifts, unemployment, trust funds, inheritance, gambling winnings, Social Security payments, retirement payments, rents from tenants, interests and dividends, asset sales, etc.
- Contributions received for living expenses from non-filing spouse (if married) or other household members over the last seven months
- Statements for bank or credit union accounts, stock brokerage accounts or other similar accounts for the last two months
- Bills, notices or letters received from creditors and/or collectors in the last three months for all your debts including notices of pending lawsuits, judgment liens, garnishments or foreclosures
- Court orders for child support or spousal support, including current amounts or arrearages due and owing
- Statements or bills for current monthly living expenses
- Federal and state income tax returns for the last two years, including W-2s and 1099s for the most recent year
- Recent credit report for each individual debtor
- Documents regarding any bankruptcy you filed during the last eight years
- For business debtors, balance sheets plus income and expense summary for the prior year ending and the last month of the current year
If you think Chapter 13 bankruptcy may be a good way for you to take control of your debt situation,contact Long & Long PC today to schedule a free initial consultation. We have offices in Downtown Denver and South Metro Areas, making us one of the most accessible bankruptcy law firms in the Denver metro area.